Ghana Among Africa’s Top FDI Destinations
Ghana is now one of the most attractive African destinations for foreign investors – thanks to a strong and stable democracy – as well as years of seeking to create a favourable local environment for those investors via institutions focused on sustaining a strong business environment.
Notably, over the course of the last several decades – the country has gradually put in place a legal framework to protect and encourage investment.
Current FDI Figures for Ghana
As the UNCTAD World Investment Report 2020 details – foreign investment into Ghana in 2019 reached $38.5 Million USD. As the report details – mining and oil exploration are the main sectors in Ghana attracting foreign investment. Ghana regularly holds investment summits like the Ghana Investment Summit — to further solidify its’ position as West Africa’s hub for foreign investors.
At present, China maintains the highest number of investment projects in the country, followed by India, the UK, South Africa, Turkey, Mauritania, and France.
Attractiveness of Foreign Investment in Ghana
Several factors make Ghana attractive for foreign investors. For example, Ghanaian authorities continually seek to simplify the complexity associated with foreign investment into the country – while also offering sizeable tax incentives to foreign investors.
Ghana’s stable democracy, economic stability, large middle class consumer base, large and inexpensive labour force, large agricultural base, abundant natural resources, comparatively well-developed infrastructure, stable institutions, status as a regional business hub for West Africa, a strong stock market, and 100% foreign investor ownership rights — make the country uniquely appealing.
Foreign Investors in Ghana Face Some Challenges
Foreign investors will face some issues that can be effectively navigated with knowledgeable legal and strategic counsel. They include cumbersome bureaucracy, difficulty in obtaining financing, some instances of corruption, unemployment, complicated property laws, inconsistent infrastructure development, occasional energy supply cuts, unskilled labour, and instances of weak productivity.
Specific Rules Governing Foreign Investors in Ghana
There are some specific rules for foreign investors in Ghana which are worth keeping note of by anyone interested in investing in the country:
- A reduced corporate tax rate of 8% is available to companies engaged in non-traditional exports. A 20% rate applies to financial institutions on incomes from loans to farms and leasing companies.
- Free Trade Zone companies are exempted from paying corporate tax for 10 years. They then pay 15% on export sales.
- Manufacturing companies located outside Accra and Tema receive a tax rebate: 75% of the corporate tax rate of 25% – in regional capitals. And elsewhere — it is 50% of the standard rate.
- Tax holidays accrue to companies from time of operation – in agriculture, waste processing, rural banking, and venture capital (which pays a 1% corporate tax for periods ranging from 5 to 10 years)
- On income generated for low-cost housing, a 1% corporate tax applies for 5 years.
- Entrepreneurs under 35 receive a 5-year corporate tax holiday for specific businesses, and further rebates after the initial 5 years.
- No corporate taxes apply to private universities if they reinvest 100% of their profits into university operations.
- Employers receive an additional tax deduction of between 10% and 50% for employing recent graduates.
- Foreign investors can maintain 100% ownership and cannot have their interests expropriated, pursuant to the Ghanaian constitution and as a signatory to the World Bank’s Multilateral Investment Guarantee Agency (MIGA) Convention.
- Foreign investors must be registered with the Ghana Investment Promotion Centre (GIPC)
- Investments in real estate, oil and gas, mining, insurance, and telecommunications must receive specific authorisations.
- Registration and renewal fees for foreign oil and gas service providers apply.
A Bright Future: Ghana’s Government is Focused on Investment Reform
Ghana’s Government announced in 2019 a plan to implement ten reforms to help attract greater foreign investment. These reforms include a streamlined tax, legal and business registration process, digital issuance of business and construction permits, power sector improvement, economic diversification, and a simplification of investment procedures.
CQ Legal Provides Comprehensive Legal and Strategic Counsel to Foreign Investors
CQ Legal advises foreign investors on all legal and strategic aspects of foreign investment in Ghana. For more information or to arrange a discussion about your specific situation, please contact us and we’ll respond promptly.
Cynthia Quarcoo is the Founder and Managing Partner of CQ Legal & Consulting, a boutique law firm based in Accra, Ghana.